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NEWS: City Budget 2010 Crunch Time

Do you know that Vancouver city council is drawing up the 2010 budget with the probability of significant cuts or increased charges and user fees next year?

Usually the budget is completed in the spring but this year, due to the Olympics, the final decision on the $900-million-plus annual operating budget will be taken in December not next April.

Vancouver, like most municipalities, faces tough decisions for 2010 due to the economic recession. There are cost pressures from previous commitments, increased costs and the loss of nearly $16 million in development fees.

In a recession it makes good sense to increase public spending to support the economy and provide services that are needed more in recession than in times of growth. Yet, unlike the provincial and federal governments, the city is not allowed to run a deficit.

For most people money is tight, so a significant tax increase or extra charges would be a big hit. In hard times there is often increased use of many city services. How can Vancouver support much-needed services without driving up taxes?

In late Sept, the city announced it faced a shortfall of $61.7 million without an increase in revenue. By mid-October, the city reduced the gap to $28.1 million by increasing user fees, permits and licenses by four per cent, conducting a thorough review of services and efficiencies, and extending the hiring freeze for a second year.

On Oct. 20, city council instructed staff to come back with a revised budget that increases property tax by 2.3 per cent and find another $20 million in savings through increased charges and service cuts. In addition, the city is planning to go ahead with a further two per cent shift of taxes from commercial to residential properties. If the overall tax increase stays at 2.3 per cent, this will result in a 4.3 per cent increase for residents while businesses (or their landlords) will receive a modest tax hike of 0.3 per cent.

At present the city hasn’t specified where the cuts will be, but they could include shorter opening hours for pools, libraries and community centres, higher charges for senior centres, reduced cleaning of streets and parks, less road maintenance, higher parking fees and library fines, fewer police or reduced support for community groups. Moreover, the service review and hiring freeze will hit city services, as both
the supply and quality of service suffers when staff that retire or
leave are not replaced. It also adds to unemployment as people are not
hired to fill these vacant positions.

Instead of cutting services, the city could choose to look at alternatives to reduce the 2010 budget shortfall. For example, city council could suspend the tax shift for a year, which combined with a four per cent overall increase in property tax spread across all property classes would generate $22 million. This would share responsibility fairly between taxpayers and would mean an extra $5.50 per month in property tax on the average house assessed at $782,000.

The city could also waive the four per cent pay increase for senior managers saving nearly $3.0 million.
Or it could extend the hours of parking meter operation – this could raise a few million dollars which would compensate for the $1.8 million in parking income the city will lose during the Olympics.

Together, these three measures would virtually close the $28.1 million budget gap without cuts or higher user fees. These are just some of the ways the city could find additional revenue.

The city's budget is both an outcome and a process, with a close connection
between the two. In our society most organizations use a managerial,
expert-based process that analyzes costs and benefits. There is often
some recognition of a wider constituency of shareholders, members, or
customers. In a political budget process, the impact on voters is
considered.

THis city has always worked on such a tight budget. It's nearly impossible to run a city efficiently and meet it's needs when you're scraping, borrowing from one to pay the other just prolonging the demise. The solution is outside the box but how to draw from it is the challenge. I would say that there needs to be a yearly meeting of all Mayors of our major cities and Premiers of each province meet with the Prime Minister each year to tackle the collective issues. Having said that, Vancouver is hosting the Olympics this year and our city is experiencing and will experience in the future many changes. To prepare for the event is huge and obviously is a costly investment. As a country, the host city should not be required to use their general budget revenue. It appears we've come to a juncture - a short fall of city funds but Olympic costs continue. A meeting is therefore required by the Mayor, Premier and Prime MInister to inject Olympic funds for what is in our national interest. The burden should not fall on the city or province's general working budgets.
Two issues are at hand:
1. Cities need a bigger budget to work with especially those at ports that grow substantially more then others. We also receive a great number of transients coming to BC and are initially the baby sitters of other provinces - this should be taken into consideration by the federal governement.
2. Any city that is fortunate enough to hold the Olympics must have the entire country behind them which includes funding. The upfront costs for the nation are huge but returns are far greater in years to come. Since city and provincial budgets are extremely tight and set with little wiggle room, no city or province should use their fiscal funds to host the Olympics. We as a nation share those funds on a national scale. It is the pride of our entire nation that is being expressed. Vancouver, the host city this time, is fortunate to have been chosen. Like any host city, it cannot and does not pursue this priveleged venture by claiming or hoarding it as their own but embarks upon it as a symbol of our entire nation's pride. It is a collective issue.
Therefore, it is evident to me that the 3 Amigo's must get together and agree on the required additional federal dollars - not as a loan - not as good will but what is nedessary, reasonable and responsible.